Sunday, July 24, 2011

Africa's Mobile Economic Revolution: It's Now the Silicon Valley of Banking and Will Change the World

"It may seem unlikely, given its track record in technological development, but Africa is at the center of a mobile revolution. In the west, we have been adapting mobile phones to be more like our computers: the smartphone could be described as a PC for your pocket. In Africa, where a billion people use only 4% of the world's electricity, many cannot afford to charge a computer, let alone buy one. This has led phone users and developers to be more resourceful, and African mobiles are being used to do things that the developed world is only now beginning to pick up on.

The most dramatic example of this is mobile banking. Four years ago in Kenya, the mobile network Safaricom introduced a service called M-Pesa which allows users to store money on their mobiles. If you want to pay a utilities bill or send money to a friend, you simply dispatch the amount by text and the recipient converts it into cash at their local M-Pesa office. It is cheap, easy to use and, for millions of Africans unable to access a bank account or afford the hefty charges of using one, nothing short of revolutionary.

Safaricom didn't invent mobile banking: it existed previously in countries such as Norway and Japan, but on a small scale and with nothing like the seismic effect it had in Kenya. The established banks weren't happy at first – they tried to shut down M-Pesa soon after it started – but now they are getting in on the game, and it is estimated that by 2015 global mobile transactions will exceed one trillion dollars."

According to California-based mobile-banking innovator Carol Realini, executive chairman of Obopay: "Africa is the Silicon Valley of banking. The future of banking is being defined here… It's going to change the world."

2 Comments:

Regulators at the U.S. Treasury Department have been on the mobile banking bandwagon for a while now. They they it will help track terrorist financial transactions because mobile banking increases participation in the normal, regulated banks (as opposed to informal, undocumented remittance systems).